Rising interest rates could spark job losses. Is this the best system we have?
2 years, 5 months ago

Rising interest rates could spark job losses. Is this the best system we have?

ABC  

The Reserve Bank will consider lifting interest rates again today. Because after suffering through stagflation in the 1970s, policymakers wanted to prevent stubbornly high inflation ever becoming a problem again, so they abandoned the post-war policy of "full employment". "This radical transformation of employment service delivery is without parallel in OECD countries," noted the Organisation for Economic Co-operation and Development in a special paper on Australia's new labour market experiment. An unemployment benefit below the poverty line Second, even though full employment was discarded long ago, and the government's "employment services" were privatised, the purchasing power of Australia's unemployment benefit was also allowed to deteriorate. "The income shock from falling into unemployment in Australia is much larger than in other countries and minimum income supports remain well below the relative poverty line," the OECD warned in September last year.

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History of this topic

RBA Is More Confident on CPI, But Too Early to Declare Victory
1 day, 5 hours ago

RBA Is More Confident on CPI, But Too Early to Declare Victory

Live Mint  

-- Australia’s central bank is more confident that inflation is moving sustainably toward target but it’s still too soon to conclude the battle is won given a recent pick-up in consumption and a still-tight labor market, minutes of the December meeting showed. The Reserve Bank’s board discussed scenarios in which future policy would be eased to boost economic growth or …

What does rising inflation mean for you - and has it killed off a Bank of England interest rate cut?
6 days, 21 hours ago

What does rising inflation mean for you - and has it killed off a Bank of England interest rate cut?

Daily Mail  

Inflation in the UK climbed to 2.6 per cent in November, it was revealed today, as the rise in the cost of living accelerated again. James Smith, developed markets economist, UK, at ING, said: 'Our base case is for back-to-back to rate cuts from February onwards, with Bank Rate falling to 3.25 per cent later in the year. While services …

UK inflation increase solidifies expectations interest rates will be kept on hold
6 days, 22 hours ago

UK inflation increase solidifies expectations interest rates will be kept on hold

Associated Press  

LONDON — Inflation in the U.K. rose to its highest level in eight months during November, official figures showed Wednesday, a development that has cemented market expectations that the Bank of England will opt against cutting borrowing costs this week. It said stubbornly high inflation in the crucial services sector, which accounts for around 80% of the U.K. economy, and …

Surge in wages means beleaguered borrowers must wait for interest rates cut
Trending News
1 week ago

Surge in wages means beleaguered borrowers must wait for interest rates cut

The Independent  

For free real time breaking news alerts sent straight to your inbox sign up to our breaking news emails Sign up to our free breaking news emails Sign up to our free breaking news emails SIGN UP I would like to be emailed about offers, events and updates from The Independent. Read our privacy policy The Bank of England is …

U.S. job growth outperforms expectations as hiring resurges and unemployment drops
2 months, 3 weeks ago

U.S. job growth outperforms expectations as hiring resurges and unemployment drops

LA Times  

A hiring sign is displayed at a grocery store in Deerfield, Ill. “The report doesn’t single-handedly change the landscape for the economic outlook, but it does provide reassurance that there’s still plenty of life in the jobs market,” said Jim Baird, chief investment officer with Plante Moran Financial Advisors, a major accounting firm based in the Detroit area. The strong …

Column: American economists and consumers got inflation wrong during its recent surge. They still do
2 months, 4 weeks ago

Column: American economists and consumers got inflation wrong during its recent surge. They still do

LA Times  

Sen. JD Vance tried to blame the $4 price of a dozen eggs on Kamala Harris in this campaign video. The “strong policy response” Powell referred to was the Fed’s raising of short-term interest rates 11 times, a total of 5.25 percentage points, from March 2022 through July 2023. In November 2021, however, Powell told Congress that it was “probably …

The Federal Reserve starts cutting interest rates in a big moment for the economy
3 months, 1 week ago

The Federal Reserve starts cutting interest rates in a big moment for the economy

NPR  

The Federal Reserve starts cutting interest rates in a big moment for the economy toggle caption Win McNamee/Getty Images North America The Federal Reserve moved aggressively Wednesday to start cutting interest rates as its single-minded focus on fighting inflation gives way to a growing interest in protecting the job market. On average, members of the Fed's rate-setting committee expect borrowing …

The RBA is making confusion about inflation and the cost of living even worse
3 months, 3 weeks ago

The RBA is making confusion about inflation and the cost of living even worse

ABC  

There's a paradox about the way we respond to threats to the cost of living. At the same time, when the cost of living climbs enough to push inflation beyond the Reserve Bank's target, the bank pushes up interest rates in an attempt to drive measured inflation down. Sharp interest rate increases are a problem The response of the Reserve …

Ex-regional Fed president: Inflation headed lower, with interest rates likely to follow
5 months, 1 week ago

Ex-regional Fed president: Inflation headed lower, with interest rates likely to follow

Associated Press  

WASHINGTON — Having worked in the Federal Reserve system her entire career, Loretta Mester rose to become president of the Cleveland Fed for a decade until her retirement on June 30. During most of her years on the Fed’s interest-rate-setting committee, Mester was likely to favor relatively higher interest rates to contain inflation. Yet in a recent interview Mester reiterated …

Powell stresses message that US job market is cooling, a possible signal of coming rate cut
5 months, 2 weeks ago

Powell stresses message that US job market is cooling, a possible signal of coming rate cut

Associated Press  

WASHINGTON — Federal Reserve Chair Jerome Powell on Wednesday reinforced a message that the Fed is paying growing attention to a slowing job market and not only to taming inflation, a shift that signals it’s likely to begin cutting interest rates soon. “We also have an employment mandate.” On Tuesday, when Powell addressed the Senate Banking Committee, he suggested that …

Further rate rises look increasingly possible, but would they fix inflation?
6 months ago

Further rate rises look increasingly possible, but would they fix inflation?

ABC  

After 13 interest rate hikes that sent home loan repayments soaring, we still have an inflation problem. Two years of rate rises have failed to slow the economy down enough to get inflation back within the RBA's preferred range. According to the RBA governor, aggregate demand continues to outstrip supply even though a large number of households are under extreme …

With election looming, UK’s governing Conservatives seize on inflation fall to 2% target
6 months ago

With election looming, UK’s governing Conservatives seize on inflation fall to 2% target

Associated Press  

LONDON — Inflation in the U.K. returned to the Bank of England’s target rate of 2% for the first time in nearly three years, official figures showed Wednesday, a development that was seized on by the governing Conservative Party as evidence that its economic plan is “working” ahead of the July 4 election. But Conservative Prime Minister Rishi Sunak hailed …

Federal Reserve sees some progress on inflation but envisions just one rate cut this year
6 months, 1 week ago

Federal Reserve sees some progress on inflation but envisions just one rate cut this year

Associated Press  

WASHINGTON — Federal Reserve officials said Wednesday that inflation has fallen further toward their target level in recent months but signaled that they expect to cut their benchmark interest rate just once this year. The policymakers’ forecast for one rate cut was down from their previous projection of three cuts, because inflation, despite having cooled in the past two months, …

Inflation eases in May, but major relief on interest rates not coming soon
6 months, 1 week ago

Inflation eases in May, but major relief on interest rates not coming soon

LA Times  

Federal Reserve Chair Jerome H. Powell and his colleagues at the central bank have kept interest rates at a more than 20-year high to fight inflation. The Federal Reserve has raised interest rates to the highest level in more than two decades to fight inflation, and on Wednesday policymakers said the fight wasn’t over. “But we don’t see ourselves as …

RBA Sees Some Households Struggling, Suggesting Rate-Hike Limits
6 months, 3 weeks ago

RBA Sees Some Households Struggling, Suggesting Rate-Hike Limits

Live Mint  

-- Australia’s inflation is showing persistent strength and weighing heavily on the finances of some households, a senior Reserve Bank official said, highlighting the limits to further interest-rate increases. “The board are absolutely focused on the fact that inflation is clearly still above the target band,” RBA Assistant Governor Sarah Hunter said at a conference in Sydney on Thursday, referring …

Inflation rises slightly in April to 3.6pc but economists say that should ring 'alarm bells' for RBA
6 months, 3 weeks ago

Inflation rises slightly in April to 3.6pc but economists say that should ring 'alarm bells' for RBA

ABC  

In short: The annual rate of inflation ticked up to 3.6 per cent in April, from 3.5 per cent in March. According to the Australian Bureau of Statistics, an underlying measure of inflation — called "trimmed mean" inflation — also picked up again in April, from 4 per cent to 4.1 per cent. "It does not appear that the RBA …

Are US interest rates high enough to beat inflation? The Fed will take its time to find out
7 months, 1 week ago

Are US interest rates high enough to beat inflation? The Fed will take its time to find out

Associated Press  

WASHINGTON — The sharp interest rate hikes of the past two years will likely take longer than previously expected to bring down inflation, several Federal Reserve officials have said in recent comments, suggesting there may be few, if any, rate cuts this year. “That would suggest that they either need to stay high for longer or maybe even higher for …

Are US interest rates high enough to beat inflation? The Fed will take its time to find out
7 months, 1 week ago

Are US interest rates high enough to beat inflation? The Fed will take its time to find out

Associated Press  

WASHINGTON — The sharp interest rate hikes of the past two years will likely take longer than previously expected to bring down inflation, several Federal Reserve officials have said in recent comments, suggesting there may be few, if any, rate cuts this year. “That would suggest that they either need to stay high for longer or maybe even higher for …

The Reserve Bank's interest rate dilemma: Households are hurting but inflation remains stubbornly high
7 months, 2 weeks ago

The Reserve Bank's interest rate dilemma: Households are hurting but inflation remains stubbornly high

ABC  

Please make it stop. That's what Michele Bullock must say to herself after RBA board meeting days, when journalists conjure a dozen different ways to ask the same question — what's going to happen with interest rates? Over the past year, the inflation rate for discretionary goods and services has been within the RBA's 2-3 per cent target band, at …

Why further interest rate hikes by the Reserve Bank won't fix Australia's inflation problem
7 months, 2 weeks ago

Why further interest rate hikes by the Reserve Bank won't fix Australia's inflation problem

ABC  

If only there was a diagnosed condition called One Size Fits All syndrome. That's helped push one measure of price rises — core inflation — higher on a quarterly measure. Quick as a flash, that's sparked a renewed demand from some sections of the economics commentariat for further rate hikes to smash the evils of inflation once and for all. …

Federal Reserve says interest rates will stay at two-decade high until inflation further cools
7 months, 3 weeks ago

Federal Reserve says interest rates will stay at two-decade high until inflation further cools

Associated Press  

WASHINGTON — The Federal Reserve on Wednesday emphasized that inflation has remained stubbornly high in recent months and said it doesn’t plan to cut interest rates until it has “greater confidence” that price increases are slowing sustainably to its 2% target. Despite the recent setbacks, he said, “My expectation is that over the course of this year, we will see …

UK inflation is heading in ‘right direction,’ but Bank of England isn’t ready to cut rates
9 months ago

UK inflation is heading in ‘right direction,’ but Bank of England isn’t ready to cut rates

Associated Press  

LONDON — The Bank of England kept its main interest rate unchanged at a 16-year high on Thursday and avoided signaling, unlike other central banks, when it might start to cut even though inflation has dropped sharply from multidecade peaks. In the U.K., market expectations that lower interest rates were on the horizon got a boost this week with news …

UK fell into recession at the end of 2023 as economy takes center stage in runup to general election
10 months, 1 week ago

UK fell into recession at the end of 2023 as economy takes center stage in runup to general election

Associated Press  

LONDON — The British economy fell into recession at the end of 2023 for the first time since the onset of the coronavirus pandemic, as output shrank more than anticipated in the final three months of the year, official figures showed Thursday. The quarterly decline followed a 0.1% fall in the previous three-month period and highlights how the economy has …

Inflation is nearly back to 2%. So why isn’t the Federal Reserve ready to cut rates?
10 months, 2 weeks ago

Inflation is nearly back to 2%. So why isn’t the Federal Reserve ready to cut rates?

Associated Press  

WASHINGTON — From Wall Street traders to car dealers to home buyers, Americans are eager for the Federal Reserve to start cutting interest rates and lightening the heavy burden on borrowers. “If interest rates can come down, I think we’re going to start selling more cars.” Kelleher is likely to get his wish by May or June, when most economists …

Inflation fall 'should kill off' any lingering interest rate rise risks
10 months, 3 weeks ago

Inflation fall 'should kill off' any lingering interest rate rise risks

ABC  

In short: Consumer prices rose just 0.6 per cent over the December quarter, the slowest pace since March 2021, and 4.1 per cent over the past year. Consumer prices rose just 0.6 per cent over the December quarter, the slowest pace since March 2021, and 4.1 per cent over the past year. Moreover, the Reserve Bank's preferred "trimmed mean" measure …

What are the alternatives to using interest rates to tackle inflation? We put your questions to economist Saul Eslake
10 months, 3 weeks ago

What are the alternatives to using interest rates to tackle inflation? We put your questions to economist Saul Eslake

ABC  

Daniel Wigg doesn't drink alcohol anymore. "Although, like interest rates, it would leave older people unscathed," Mr Eslake said. Saul Eslake says lifting income tax was a common way of responding to high inflation in the 1950s and 60s, but "no government would want to do that now". Mr Eslake also said interest rates were kept "too low for too …

Cutting interest rates too soon in Europe risks progress against inflation, central bank chief says
11 months, 1 week ago

Cutting interest rates too soon in Europe risks progress against inflation, central bank chief says

Associated Press  

FRANKFURT, Germany — Cutting interest rates too soon could threaten Europe’s progress in battling the inflation that has ravaged the economy, the head of the European Central Bank said Wednesday amid widespread speculation that the bank soon will lower rates from record highs. Christine Lagarde, faced with market expectations for rate cuts as soon as March or April and a …

Congressional Budget Office projects lower inflation and higher unemployment into 2025
1 year ago

Congressional Budget Office projects lower inflation and higher unemployment into 2025

Associated Press  

WASHINGTON — The Congressional Budget Office said Friday it expects inflation to nearly hit the Federal Reserve’s 2% target rate in 2024, as overall growth is expected to slow and unemployment is expected to rise into 2025, according to updated economic projections for the next two years. The office’s Current View of the Economy from 2023 to 2025 report estimates …

Interest rates may need to rise again, warns Bank of England
1 year ago

Interest rates may need to rise again, warns Bank of England

The Telegraph  

Policymakers pushed back against any assumption of an imminent fall in the Bank’s base rate, warning that pay and services inflation – two key indicators of price pressures – “remained elevated”. The MPC said: “Inflation persistence remained higher than in other major advanced economies, possibly reflecting less favourable supply-side developments and stronger second-round effects in the UK.” Britain’s inflation rate, …

Economists predict US inflation will keep cooling and the economy can avoid a recession
1 year ago

Economists predict US inflation will keep cooling and the economy can avoid a recession

Associated Press  

NEW YORK — Most business economists think the U.S. economy could avoid a recession next year, even if the job market ends up weakening under the weight of high interest rates, according to a survey released Monday. Most of the surveyed economists expect inflation to continue to slow in 2024, though many say it may not get all the way …

JPMorgan boss Jamie Dimon warns 7% interest rates would cripple the global economy as the Fed holds the line at 5.5%: 'You find out who is swimming naked when that tide goes out'
1 year, 2 months ago

JPMorgan boss Jamie Dimon warns 7% interest rates would cripple the global economy as the Fed holds the line at 5.5%: 'You find out who is swimming naked when that tide goes out'

Daily Mail  

The boss of JPMorgan has warned that the worst of the interest rate pain may still be ahead for businesses and families already scarred by an historic round of hikes. JPMorgan chief Jamie Dimon said that the Fed was forced to hold on another hike at its latest meeting because the effect of a jump to 5 to 7 percent …

Interest rates will stay high ‘as long as necessary,’ the European Central Bank’s leader says
1 year, 2 months ago

Interest rates will stay high ‘as long as necessary,’ the European Central Bank’s leader says

Associated Press  

FRANKFURT, Germany — The head of the European Central Bank said Monday that interest rates will stay high enough to restrict business activity for “as long as necessary” to beat back inflation. Christine Lagarde said rates would stay high because upward pressure on prices “remains strong” in the 20 countries that use the euro currency. “We remain determined to ensure …

Why the US job market has defied rising interest rates and expectations of high unemployment
1 year, 2 months ago

Why the US job market has defied rising interest rates and expectations of high unemployment

Associated Press  

WASHINGTON — Last year’s spike in inflation, to the highest level in four decades, was painful enough for American households. Grim forecasts from economists had predicted that as the Federal Reserve jacked up its benchmark rate ever higher, consumers and businesses would curb spending, companies would slash jobs and unemployment would spike as high as 7% or more — twice …

The RBA says the fight against inflation has entered a new phase. Here's what it means for interest rates
1 year, 4 months ago

The RBA says the fight against inflation has entered a new phase. Here's what it means for interest rates

ABC  

Australia has entered a new frontier in its fight against inflation after the Reserve Bank left interest rates on hold at 4.1 per cent for the second month in a row at its August meeting. It comes back to the fact the RBA's cash rate is only a benchmark — and it's only part of a more complicated puzzle used …

Inflation slows more than expected, chance of an August RBA interest rate rise reduced
1 year, 4 months ago

Inflation slows more than expected, chance of an August RBA interest rate rise reduced

ABC  

Consumer prices rose 0.8 per cent over the three months to June, making a 6 per cent increase over the past year. Key points: Quarterly inflation slowed from 1.4pc in March to 0.8pc in June The annual rate of headline inflation is 6pc, down from 7.8pc in December Economists and financial traders now believe an RBA interest rate rise next …

Key question as Federal Reserve meets: Can the central bank pull off a difficult ‘soft landing’?
1 year, 5 months ago

Key question as Federal Reserve meets: Can the central bank pull off a difficult ‘soft landing’?

Associated Press  

WASHINGTON — When Chair Jerome Powell and other Federal Reserve officials gather this week for their latest decision on interest rates, they will do so on the cusp of achieving an elusive “soft landing” — the feat of curbing inflation without causing a deep recession. “I would have been not super-optimistic about a soft landing a few months ago,” said …

The world seems headed for a mild output contraction
1 year, 5 months ago

The world seems headed for a mild output contraction

Live Mint  

There are currently four scenarios for the global economic outlook. The most positive is a ‘soft landing,’ where central banks in advanced economies manage to bring inflation down to their 2% targets without triggering a recession. If the effort to tame inflation triggers severe economic and financial instability, a fourth scenario becomes possible: central banks wimp out and allow for …

Top central bankers assert need for higher interest rates to tackle persistent inflation
1 year, 5 months ago

Top central bankers assert need for higher interest rates to tackle persistent inflation

Associated Press  

FRANKFURT, Germany — Leading global central bankers asserted Wednesday that they are not backing off their steep interest rate increases, pointing to inflation being more persistent than expected but still downplaying fears of recession from their hikes. “We have to be resolute and decided and determined in reaching the target that we have set.” Despite rapid rate increases, Powell said …

Europe’s interest rates to stay high as long as needed to defeat inflation, central bank chief says
1 year, 5 months ago

Europe’s interest rates to stay high as long as needed to defeat inflation, central bank chief says

Associated Press  

FRANKFURT, Germany — European Central Bank President Christine Lagarde warned Tuesday that inflation is holding its grip on the economy and underlined that the bank intends to raise rates high enough to “break this persistence.” Lagarde acknowledged that inflation has fallen from all-time highs last year as energy prices plunged and the bank rolled out a rapid series of rate …

UK recession fears mount after Bank of England hikes borrowing rates by more than expected
1 year, 6 months ago

UK recession fears mount after Bank of England hikes borrowing rates by more than expected

Associated Press  

LONDON — Fears that the British economy is heading for recession mounted sharply Thursday after the Bank of England raised borrowing costs by more than anticipated, seeking to combat stubbornly high inflation with a hike that will hit borrowers hard, particularly homeowners who have to refinance in the coming months. “But if we don’t raise rates now, it could be …

Chancellor: ‘No alternative’ to interest rate rises to bring down inflation
1 year, 6 months ago

Chancellor: ‘No alternative’ to interest rate rises to bring down inflation

The Independent  

For free real time breaking news alerts sent straight to your inbox sign up to our breaking news emails Sign up to our free breaking news emails Sign up to our free breaking news emails SIGN UP I would like to be emailed about offers, events and updates from The Independent. Read our privacy policy The UK has “no alternative” …

Number Theory: Should monetary policy pivot towards growth?
1 year, 7 months ago

Number Theory: Should monetary policy pivot towards growth?

Hindustan Times  

A couple of months ago, this question would have seemed preposterous. “India’s headline retail inflation in May is likely to fall further towards 4% — the midpoint of the central bank’s target and a level last seen in January 2021, according to a few economists, who expect lower food prices to aid the decline,” a Reuters story said on Monday. …

Australians feeling the sting of inflation and rising interest rates could soon face a recession — and more pain
1 year, 9 months ago

Australians feeling the sting of inflation and rising interest rates could soon face a recession — and more pain

ABC  

What happens on the other side of trouble? The National Accounts, which also measure inflation with what's called the GDP "price deflator", has the cost of living rising at 9.1 per cent. AMP senior economist Diana Mousina puts the "recession probability in the next two years as high, around 40 per cent". "That's almost half the 4.7 per cent annual …

Fed’s rate hikes likely to cause a recession, research says
1 year, 10 months ago

Fed’s rate hikes likely to cause a recession, research says

Associated Press  

NEW YORK — Can the Federal Reserve keep raising interest rates and defeat the nation’s worst bout of inflation in 40 years without causing a recession? The perception that the central bank will need to keep raising borrowing costs was reinforced by a government report Friday that the Fed’s preferred inflation gauge accelerated in January after several months of declines. …

Bank policymaker says pausing interest rate rises ‘risks worst of both worlds’
1 year, 10 months ago

Bank policymaker says pausing interest rate rises ‘risks worst of both worlds’

The Independent  

For free real time breaking news alerts sent straight to your inbox sign up to our breaking news emails Sign up to our free breaking news emails Sign up to our free breaking news emails SIGN UP I would like to be emailed about offers, events and updates from The Independent. Read our privacy policy A Bank of England policymaker …

Unemployment rate jumps from 3.5 per cent to 3.7 per cent in January figures
1 year, 10 months ago

Unemployment rate jumps from 3.5 per cent to 3.7 per cent in January figures

ABC  

Australia's unemployment rate has increased from 3.5 per cent to 3.7 per cent according to last month's figures, in seasonally adjusted terms. "January is the most seasonal time of the year in the Australian labour market, with people leaving jobs but also getting ready to start new jobs or return from leave," Mr Jarvis said. David Bassanese, the chief economist …

Why the Reserve Bank is pushing us towards a recession that we don't need to have
1 year, 10 months ago

Why the Reserve Bank is pushing us towards a recession that we don't need to have

ABC  

What if you woke up one morning only to be told the very essence of everything you believed in was wrong? Despite the punishing raft of US interest rate hikes in the past year, American unemployment dropped to a 54 year low of just 3.4 per cent, just one point below ours which, at 3.5 per cent, is the lowest …

Is there a better way to kill inflation than raising interest rates?
1 year, 10 months ago

Is there a better way to kill inflation than raising interest rates?

ABC  

We have to stop this insanity. As things stand, the main policy lever available to the RBA is interest rates, and with inflation surging that's why it's been lifting rates aggressively. "For a broader effort in slowing economic growth, more heavy lifting would need to come from fiscal policy, though so far it's been missing in action," he said. If …

Interest rate updates: Philip Lowe says RBA will 'do what is necessary' to curb inflation as cash rate reaches highest level since September 2012 — as it happened
1 year, 10 months ago

Interest rate updates: Philip Lowe says RBA will 'do what is necessary' to curb inflation as cash rate reaches highest level since September 2012 — as it happened

ABC  

Question for Gareth please If, as all economists state, the reason for rate rises is to curb inflation by inhibiting consumer spending, why doesn’t the government give he RBA the power to adjust the GST rate. This would surely impact consumer spending across the board to share the pain, could be targeted by exempting non discretionary expenditure and would have …

Reserve Bank raises interest rates, 'expects that further increases will be needed'
1 year, 10 months ago

Reserve Bank raises interest rates, 'expects that further increases will be needed'

ABC  

The Reserve Bank has raised interest rates for the ninth meeting in a row, taking the cash rate target to its highest level since September 2012. Key points: The RBA's cash rate target is now at 3.35 per cent That is the highest level of the cash rate since September 2012 The RBA governor indicates that further rate rises are …

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